Friday, 6 March 2009

The credit crunch is half our fault

Here’s something we can’t even blame the politicians for all of. And they won’t mention it if we won’t.

The elephant in the room is personal fecklessness: ours.
Ours -to some value of ‘ours.’

I know something about this because for five glorious years I worked as a financial advisor for -let’s call them Pearle, Patience and Greene-Knight. I sold life insurance and car and property insurance. I sold pensions and mortgages and mortgage cover and endowments and income protection products. Or at least, I tried to sell them.

My customers were Middle England incarnate. They were retired couples and widows; suburban housewives (steady boy, steady!) and decorators and office clerks; farm labourers and farmers and lorry drivers, doctors and teachers and industrial process workers and even Castle City’s self-made scrap yard millionaires from the, ahem, mobile home-owning community in their supermarket-size ranch-style houses on the edge of the industrial estate.

They were all good, imaginative people – they all had money – they had earned it or were earning it or their late husbands had earned it and left it to them, and they all knew that - barring illness or accident - they had futures in which money should play a part.
And so they planned. The private sector working ones would put money into private pensions – small jumps of twenty or thirty pounds a month extra each year, or lump-sum wedges for a part-time novelist lady, or even occasional large monthly hikes.
The retired and the widowed would invest into investment bonds and PEPs and TESSAs and unit trusts to make the most of their cash.

And the married couples would remortgage and swop insurances and mortgage protection
For some reason I was rarely able to sell a mortgage or its associated insurance products if I was trying to compete with a nowhere little building society called Northern Rock. Their interest rates were just too good. Their business volume must have been pretty high too because their property insurance, repayment protection and installment protection was also hugely competitive. How can you do that legally in a free competitive market? Oh.

Some of them were only customers because my predecessors had sold savings endowments or burial plans to them – or likely to their grandparents, parents or aunts and uncles to give them a bit of a financial boost when they hit 18 or 21. These were people of previous, thriftier generations – the respectable working class who didn’t want to be buried in paupers’ graves, or who didn’t want their adult children to be penniless when they left home and started out in the world. So the saving and insuring habit had been taught to them from birth.
The younger ones had grown up in the bracing air of freedom and responsibility that so typified life in Thatcher’s Britain.

So why were some of them also so bloody feckless?

The Immortals.

A typical one was the (usually) husband -or increasingly often by then the ‘partner’ - who just would not buy life insurance to cover his widow or ‘widow’ to replace his income on death so as to provide for (usually) his children. We’re talking about men earning 18 to 25 thousand pounds per year in the middle nineteen-nineties whose wives were bringing in 6 to 10 thousand for part-time work. They’d have hundreds of pounds a month uncommitted income with which to enjoy pretty good lives in their comfortable, gadget-filled homes with two or more nice cars on the drive and a similar number of weeks away in the Med.
But fork out a measly 10 to 15 pounds per month for a lump sum whose investment income should replace their earnings [once the insured mortgage was of course paid off] so their widows didn’t have to scrabble for a full-time job and spend half her wages on childcare now she can’t pick the kids up from school at 3.30?
No way Jose. ‘I’m not going to die: we live till an old age in my family.’ Or ‘She can remarry if she needs more money.’
That’s how deep many husbands’ love for their wives and kids can be; rather less than a Kentucky Fried Chicken family bucket with chips, Coke and an evening’s video hire.
Most such men I met didn’t see any problem with tucking away a further fifty quid a month each year for their own retirement (‘Otherwise you’ll retire on less than a City Council office cleaner gets, see?’). But betting the cost of one modest Friday night at home with wife and family sat on the sofa in front of the telly eating saturated fats per month against leaving an exhausted and mourning widow to chase around seeking work within a month or so of their funeral and trying to get her recently retired parents to collect their children and look after them until she got home at five-thirty or six-thirty, and her being able to afford no holidays with those kids that aren’t away-day breaks until she can fit a new husband into her exhausting schedule: not a good bet. Nothing in it for me, yeah?

This is who our libertarian pals want to build a country of rugged individualists on?

The Damned.

Admittedly, they tended to smoke and drive smaller but still expensive cars that my insured-and-mortgaged-and-pensioned income could never even dream of, but still these people had good lives and their children never wanted for bmx and visits to the amusement parks and foreign package holidays. And dear old Dad in his late twenties or early thirties would say; ‘Well, Mister Northwester, [PP & G-K still had quite a deferential clientele, in places] I know when I retire there won’t be an old age pension, but we’re already putting thirty pounds a month in, and life is getting more expensive, so maybe we’ll put some more money in next year…’ In cases like this, I often wondered how my predecessors had managed to prize the princely sum of thirty quid every single month out of their horny handed sons of labour hands in the first place. Perhaps they were more persuasive or ruthless than me.
‘But,’ I would explain, ’Look how much you’re spending now, and what you’ll need to spend when you retire,’ and we’d be off: counting the utilities bill and food and holidays and travel and (taking the mortgage off but adding the tiny projected State pension just in case it will be paid – because they never truly believed there’d be no State pension; not down in the wallet where it really counted).
And after this process we’d write down a monetarised version of their hopes for a secure and happy retirement in pounds per week to spend on one side of a piece of paper and on the other side we’d have the State pension and the best-case private pension projection added together…and they’d look at the hundred-plus pound per week shortfall between the two.
And they we’d look at the hundred pounds per week or so of their current earnings that they couldn’t account for and therefore were theoretically free to fund their future security and I’d ask for half of it to more nearly fill the pension gap and they’d say:
‘North’ [they tended to get all chummy and informal when trying to avoid investing their hard-earned pocket money], ‘my Dad died at sixty and the missus’ Mum died and sixty-two, and so we’re not going to need a pension for long anyway.’
I’d look at their weekly committed expenditure and their higher uncommitted income, and I’d look at the nice new telly and the photos of them at Alicante and the cute little plastic motorbikes for the kids in the yard and I’d try, I’d really try, to make the point which was in front of their noses; that as long as they stayed home all the time, didn’t run a car, and never replaced their TV set, they could just about afford to pay the Council Tax and eat sparingly and never travel to visit their daughter when she eventually had children when they retired.

Unless they dipped into that hundred plus pounds per week of uncommitted money. Yeah, right.

But Dad died at sixty so they were The Damned and Christmas was coming from the catalogues stacked up by the new sofa up so maybe next year, and in the meantime can you shave five pounds a month off my car insurance?…

The Philosophers.

The teachers were the worst. You always had the figures in huge detail available for you in neat files and they’d listen attentively and answer questions about hoped-for retirement income (about which they were adamant: they were NOT going to have a lower standard of living when at last they retired) and their pension projections were there and we’d look at the difference and we’d look at their expenditure and the several hundred pounds a month they did not commit already to mortgage, bills, savings and holidays and I’d ask for a hundred pound a month each, and…they’d go all shifty and that was the end of it for eye contact, and they’d ‘think about it.’

They never phone, do they? They tell you that they like you and respect you, they spend hours of intimate conversation with you, and then you wait and wait for their phone call and they never call. Instead, they’re ’thinking about it.’
Teachers: philosophers to a man.

And these are the prudent ones – the savers, the ones with some idea that they won’t disappear tomorrow, and will still need to eat, and travel and they have done, and continue to do, something about it. I rarely ever met the long-term unemployed whose bad backs and panic attacks had prostrated them [outside the football season and the holiday season of course] since the Miners’ Strike.

This is where our Right-wing conservative or libertarian self-sufficient future is coming from?

So you can say all you like about fat cat greedy bankers and Gordon Brown and his inflationary housing boom (and you’ll be right about all that, of course), but what you’ll be reluctant to mention, and the politicians daren’t mention, though it half lets them off the hook, is that nobody I ever knew held a gun to anyone’s head and said:
’Buy a mortgage you haven’t budgeted for. Borrow money for a 4 by 4 you can’t afford. Cash in the savings that might have tided you over these hard few months and years for a ‘once in a lifetime cruise’ whilst you’re young enough to enjoy it. Buy that pony; you kids are worth it and they won’t need university funding as they’re bright and will win a scholarship for sure.’

Dumb Jon and others preach about the culture wars and how can we hope for anything like a decent, prosperous, law-abiding and recognizable democracy when the BBC and Hollywood portrays every businessman and Western soldier as brutal rapists and koala-killing polluters.

It’s worse than that, Jim.
Even our side’s social and political heartlands have gone fishin’, and they left in the1990s at the latest.

How can anything resembling a conservative or classical liberal government ask such people to vote for them twice after they’ve done anything at all useful to remedy Labour’s depression.



JuliaM said...

Very, very true. What happened to thrift, and, dare I say, prudence?

North Northwester said...

Thrift is back: thanks to the son of the lady of the Manse.

And prudence went corporate, if memory serves.


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